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GSK expands oncology unit with Tesaro, hours after agreeing sale of its India operations
Posted on Wednesday, 05 December 2018 10:18
GlaxoSmithKline (GSK) has reached an agreement to acquire cancer-based drug therapy group Tesaro for USD 5.10 billion in cash, in a deal that comes hours after the firm signed the sale of its India business to Unilever.

The London-based conglomerate is offering USD 75.00 per item of stock held in the Nasdaq-listed pharmaceutical player, representing a premium of 61.7 per cent on the target’s close of USD 46.38 on 30th November, the last trading day prior to the announcement.

Shares in Tesaro closed up 58.5 per cent yesterday to USD 73.50, giving the oncology-focused biotechnology group a market capitalisation of USD 4.05 billion.

GSK has been under a strategic review since coming under management of new chief executive Emma Walmsley, who has been fixated on building the company’s pharmaceutical operations while divesting its consumer businesses.

Such moves resulted in an INR 317.00 billion (USD 4.51 billion) sale of its consumer healthcare assets in India to Unilever earlier today, in a deal that was widely reported in the media and includes brands such as Horlicks and Boost.

GSK’s announced acquisition of Tesaro will significantly help strengthen its pharmaceutical offerings, while building its pipeline and commercial capability in oncology.

The target’s main marketed product is Zejula is an oral poly inhibitor for cellular processes such as deoxyribonucleic acid (DNA) repair, genomic stability and programmed cell death, that is current approved for use in patients diagnosed with ovarian cancer.

Tesaro’s candidate is approved in the US and Europe, with GSK believing that the treatment could potentially be used for multiple cancer types and is under investigation as a possible therapy for lung, breast and prostate cancer.

Revenues for Zejula, in its current approved indication, were USD 166.00 million in the nine months ended 30th September 2018.

GSK, which plans to fund the purchase from cash resources and borrowings under its new acquisition facility, expects the addition of Tesaro to impact adjusted earnings per share in the first two years by mid to high single digit percentages.

The buyer’s guidance for its 2018 annual results are to remain unchanged with an adjusted EPS growth of between 8.0 and 10.0 per cent.

Closing is slated in the first quarter of 2019, subject to shareholder and regulatory approvals.

© Zephus Ltd